German Stocks Fall 8 Percent
Oct. 28, 1997
FRANKFURT, Germany (AP) _ Following a worldwide trend, the Frankfurt Stock Exchange plummeted 10 percent in the first 10 minutes of trading Tuesday before rebounding slightly.
The German DAX weighted index of 30 blue-chip stocks ended floor trading at 3,567, down 312 points, or 8 percent, from Monday's close after losing 171.75 points, or 4.2 percent, Monday.
``We got some bloody scratches, but we came out of it once again,'' one tired trader said.
Guenter Burghold of BHF Bank in Frankfurt said earlier traders were torn between fear of a crash and desire for profit. ``We've now arrived at this psychological borderline,'' he said.
``If Europe gets weaker and doesn't at least start to recover during the day, then New York will get weaker in turn, and tomorrow we'll meet again one floor lower with the same question,'' he said. ``But it's possible that we can resist today in Europe.''
Finance Minister Theo Waigel blamed ``exaggerated share prices'' on international financial markets for the day's sharp fall in German stock prices, while Economics Minister Guenther Rexrodt cautioned against ``panic and overreaction.''
Waigel said Southeast Asia's recent currency crises sparked the initial market worries, adding he saw a ``need for correction for those currencies.''
But he stressed that the economies of Europe and the United States are ``solid'' and should continue to grow.
Until recently, most Germans shunned stocks as too risky. But the recent privatization of Deutsche Telekom, the national phone company, has created more than 500,000 new shareholders over the past year.
Although most have never experienced a steep down market, there was little panic Tuesday, said Fidel Peter Helmer, director of the small Bankhaus Aufhaeuser. ``The customers are reacting relatively calmly.''
After declines overnight in New York and Asia, the German DAX index fell 345 points from Monday's close to 3,487 in the first 10 minutes. A flood of sell orders caused delays in the exchange's quoting system.
An exchange spokesman said, however, there were no plans to halt the session or alter trading rules.
``I think we've seen from New York that rules for the overall market, such as halting or shortening the trading session, don't bring anything,'' the Frankfurt spokesman said.
Floor trading in Frankfurt runs from 10:30 a.m. to 1:30 p.m. (9:30 GMT to 12:30 GMT).